Nation's Restaurant News on the Go #78
Nation's Restaurant News
The #1 source of news and business intelligence for restaurant and foodservice industry professionals
Serious déjà vu
Happy Friday readers, NRN editor in chief Sam Oches here.
This week, I want to rewind to the summer of 2009. It was the summer that Michael Jackson died. The world was terrified of the H1N1 virus, aka “swine flu.” Barack Obama was newly sworn in as U.S. president. Facebook introduced FarmVille.
It was also the summer I started as a foodservice reporter. And what a time it was to start following the restaurant industry.
In the summer of 2009, the nation had just pulled out of the worst of the Great Recession, which had plunged the U.S. into economic crisis a year prior. Unemployment had shot to 10% in the throes of that recession, while home prices cratered by 30% and the S&P 500 fell by 57%.
Nation’s Restaurant News’ Top 100 published in June 2009 offered a glimpse at industry performance from 2008. Chipotle was indeed the future, growing its sales the most of any chain in the Top 100 (by 22.27%) and boasting about $1.3 billion in sales. Right behind it in sales growth percentage were Buffalo Wild Wings (20.85%), Zaxby’s (18%), Subway (17.17%), and Panera Bread (16.25%).
Now consider the growth chains from NRN’s Second 100, the concepts that were nipping at the heels of the big dogs. Five Guys Burgers and Fries was the talk of the industry, growing sales by 74.32% in 2008 and closing the year just shy of $300 million (the beginning of an incredible ride that helped Five Guys clear the $1 billion mark by 2012). Right behind Five Guys were A&W (I’ll admit this one surprised me; it grew sales by 50% in 2008), Wingstop (23.44%), Potbelly (20.41%), and Qdoba (18.49%).
You’ll notice the trend here: Fast casual was storming the upper tiers of the restaurant industry. The category had been around since the mid-’90s thanks to Chipotle and Panera but was now legitimizing itself as customers traded down to more affordable yet quality options.
Fast casual would further entrench itself in 2009, 2010, and 2011 as the effects of the recession reverberated. The category’s combination of adventurous foods, lower price points, and counter service perfectly positioned it to capitalize on the soft economy. It seemed like all I could write about in my first three years as a foodservice reporter were value meals and exciting fast casuals to watch.
This summer has given me serious déjà vu. The Technomic Top 500 published last month showed that fast casual is the strongest category in foodservice, growing sales by 11.2% in 2023. And once again everyone is talking about value after customers finally threw in the towel on skyrocketing, inflation-driven prices.
If my early days in the industry are any indication, this is the perfect opportunity for emerging chains to go toe-to-toe with the biggest brands, ideally by positioning themselves around quality and affordability.
Read on to learn about value, fast casual, and plenty more from NRN.
Unit closures, rise of fast-casual restaurant chains pressure full-service sales
Evidence of the pandemic’s lingering impact on the restaurant industry is perhaps most evident in the underperformance of the casual and midscale dining segments.
While many limited-service operators thrived in the pandemic and continued to grow and optimize their operations, full-service operators have battled to rebound from the unit closures and loss of traffic they incurred in 2020.
Data from the Top 500 shows that sales of full-service operators in the Top 500 grew only 5% in 2023, lagging the industry’s 7.1% rate of menu-price inflation. Since 2019, sales among these full-service operators have grown at an average annual rate of just 2.4%, according to Technomic.
These operators, particularly in the midscale and casual-dining segments, suffered extensive unit closures in 2020 and 2021, and have yet to recover their pre-pandemic market presence. Data from the Top 500 Report shows, for example, that unit counts last year at midscale operators were about 4% below 2019 levels, and unit counts at casual chains were still 2.5% below 2019 levels.
Noodles & Company rolls out mac & cheese promotion for July
Noodles & Company is offering a lineup of curated mac & cheese items for July.
The Broomfield, Colo.-based fast-casual chain of 469 restaurants is making the “Mac & Cheese Mashup Menu” available for online orders only, all at a starting price of less than $9 throughout the month.
The items are:
4-Cheese Alfredo Mac: Elbow macaroni noodles in a four-cheese Alfredo sauce topped with MontAmoré cheese, recommended with the addition of Parmesan-crusted chicken at an additional charge
Cheesy Broccoli Mac: Elbow macaroni in a cheddar & Jack cheese sauce with broccoli, recommended with grilled chicken
Crispy Jalapeño Mac: The same as the Cheesy Broccoli Mac, but with fried jalapeño peppers instead of broccoli. It’s also recommended with grilled chicken.
Craveworthy Brands’ first food hall opens in Chicago
Illinois-based restaurant platform, Craveworthy Brands — parent company of Dirty Dough, Hot Chicken Takeover, Genghis Grill and more — announced the opening of the hospitality group’s first food hall. Craveworthy Kitchen is a cobranded space in Chicago that features multiple Craveworthy concepts in one spot.
The food hall is located on the second floor of Chicago’s iconic “Big Red” skyscraper, inside Hayden Hall. The 25,000-square-foot food hall features Krafted Smash Burgers (an offshoot of Craveworthy’s Krafted Burger Bar Tap from chef Robert Kabakoff); Lucky Cat Poke Company; The Budlong Southern Chicken; and Craveworthy Kitchen-exclusive concepts, Scramblin Ed’s (breakfast sandwiches, wraps, and bowls); and Pastizza pizza and pasta.
“Craveworthy Kitchen at Hayden Hall is a game-changer for Craveworthy Brands, telling an exciting new chapter in our story,” Gregg Majewski, CEO and Founder of Craveworthy Brands, said in a statement. “Born from the heart of Chicago, many of the brands showcased here embody the city’s vibrant culinary spirit.”
Majewski also said that he is working on adding two more concepts to the food hall, along with a full-service restaurant. Once those are open, Craveworthy Brands is going to hold a grand opening celebration in late summer or early fall.
Fuzzy’s Taco Shop has a playbook to get back to growth in 2025
Dine Brands added Fuzzy’s Taco Shop to its roster in late 2022 and the fast casual chain has since become fully integrated within its parent company – which also owns Applebee’s and IHOP – leveraging shared resources that have accelerated its strategy by about “10 to 20 years.”
So says President Paul Damico, who has been with Fuzzy’s since August 2021, well before that $80 million acquisition. His excitement about Fuzzy’s potential post-integration was palpable during a recent interview at Dine Brands’ headquarters in Pasadena, California.
“I’ve gained about 450 new friends, and we now have resources that we’ve never had before. Our franchisees are really loving that support,” he said.
With that support, Fuzzy’s will spend the rest of this year “cleaning up its system,” a job that has included a smattering of closures. According to Technomic, the chain finished 2023 with 132 locations, compared to 137 in 2022 and 137 in 2021. The pace of closures was a tick higher during covid; the company had about 146 locations at the end of 2019. The foundational work being done now is expected to position Fuzzy’s for a “growth year,” which Damico said will come in 2025.
2024 Top 500: The 50 biggest restaurant chains in America
Every year, Nation’s Restaurant News presents the Top 500 biggest restaurants in America, ranked by systemwide sales in the previous fiscal year. This year, we’re using data from our partners at Technomic to give you the best report yet.
In this gallery, meet the crown jewels: the 50 largest restaurant chains in the country. For each, you’ll also learn their systemwide sales and unit counts for 2023.
Get the National Restaurant Association Official Post-Show Recap
Go behind the scenes for the restaurant industry's biggest moment with the official National Restaurant Association Show recap, brought to you by Nation's Restaurant News and Restaurant Business.Our teams were on the scene in Chicago to bring you the latest in technology, workforce, menu and consumer trends, plus in-depth conversations with industry innovators. Packed with video, podcasts, data, new products and more, this special interactive report has the insights you need to drive growth in the year ahead.
Texas iced tea franchise HTeaO enjoys big growth as beverage wars rage on
President Heath Nielsen shares why he thinks the brand has so much upside even at a time when coffee seems to be king.
Want more Nation's Restaurant News?
Listen to our weekly podcast Extra Serving featuring Nation's Restaurant News editors & industry executives
Follow us on Instagram